Core Concepts of Accounting Information Systems

Mark G. Simkin and Carolyn S. Norman are the authors of Core Concepts of Accounting Information Systems, 13th Edition, published by Wiley.

CHAPTER 1 Accounting Information Systems and the Accountant 1 1.1 Introduction: Why Study Accounting Information Systems? 1 1.2 Careers in Accounting Information Systems 2 Traditional Accounting Career Opportunities 2 Systems Consulting 2 Certified Fraud Examiner 3 Information Technology Auditing and Security 4 Predictive Analytics 5 1.3 Accounting and IT 6 Financial Accounting 6 Managerial Accounting 9 Auditing 12 Taxation 13 1.4 What Are Accounting Information Systems? 13 Accounting Information Systems 13 The Role of Accounting Information Systems in Organizations 17 1.5 What s New in Accounting Information Systems? 18 Cloud Computing Impact for Accountants 18 Sustainability Reporting 19 Suspicious Activity Reporting 20 Forensic Accounting, Governmental Accountants, and Terrorism 21 Corporate Scandals and Accounting 21 CHAPTER 2 Accounting on the Internet 33 2.1 Introduction 33 2.2 The Internet and WorldWideWeb 34 Internet Addresses and Software 34 Intranets and Extranets 35 TheWorldWide Web, HTML, and IDEA 36 Groupware, Electronic Conferencing, and Blogs 36 Social Media and Its Value to Accountants 37 2.3 XBRL Financial Reporting on the Internet 38 XBRL Instance Documents and Taxonomies 38 The Benefits and Drawbacks of XBRL 40 The Current Status of XBRL 41 2.4 Electronic Business 42 e-Accounting 42 Retail Sales 43 E-Payments, E-Wallets, and Virtual Currencies 44 Business-to-Business E-Commerce 46 Electronic Data Interchange (EDI) 47 Cloud Computing 47 2.5 Privacy and Security on the Internet 49 Identity Theft and Privacy 49 Security 51 Spam and Phishing 52 Firewalls, Intrusion Detection Systems, Value-Added Networks, and Proxy Servers 53 Data Encryption 55 Digital Signatures and Digital Time Stamping 56 CHAPTER 3 Cybercrime, Fraud, and Ethics 67 3.1 Introduction 67 3.2 Cybercrime and Fraud 68 Distinguishing Between Cybercrime and Fraud 68 Cybercrime Legislation 70 Cybercrime Statistics 72 3.3 Examples of Cybercrime 73 Compromising Valuable Information 74 Hacking 75 Denial of Service 76 3.4 Preventing and Detecting Cybercrime and Fraud 78 Enlist Top-Management Support 79 Increase Employee Awareness and Education 79 Assess Security Policies and Protect Passwords 80 Implement Controls 81 Identify Computer Criminals 82 Maintain Physical Security 83 Recognize the Symptoms of Employee Fraud 84 Use Data-Driven Techniques 85 Employ Forensic Accountants 86 3.5 Ethical Issues, Privacy, and Identity Theft 86 Ethical Issues and Professional Associations 87 Meeting the Ethical Challenges 88 Privacy 89 Company Policies with Respect to Privacy 89 Identity Theft 90 CHAPTER 4 Information Technology and AISs 99 4.1 Introduction 99 4.2 The Importance of Information Technology to Accountants 100 Six Reasons 100 The Top 10 Information Technologies 101 4.3 Input, Processing, and Output Devices 102 Input Devices 102 Central Processing Units 108 Output Devices 110 4.4 Secondary Storage Devices 111 Magnetic (Hard) Disks 112 CD-ROMs, DVDs, and Blu-Ray Discs 113 Flash Memory 114 Image Processing and Record Management Systems 114 4.5 Data Communications and Networks 115 Communication Channels and Protocols 115 Local and Wide Area Networks 116 ClientServer Computing 118 Wireless Data Communications 120 Cloud Computing 122 4.6 Computer Software 122 Operating Systems 123 Application Software 124 Programming Languages 125 CHAPTER 5 Documenting Accounting Information Systems 139 5.1 Introduction 139 5.2 Why Documentation is Important 140 5.3 Primary Documentation Tools 143 Data Flow Diagrams 144 Document Flowcharts 149 System Flowcharts 153 Process Maps 156 5.4 Other Documentation Tools 158 Program Flowcharts 159 Decision Tables and Decision Trees 160 Software Tools for Graphical Documentation and SOX Compliance 162 5.5 End User Computing and Documentation 164 The Importance of End User Documentation 165 Policies for end user Computing and Documentation 166 CHAPTER 6 Developing and Implementing Effective Accounting Information Systems 179 6.1 Introduction 179 6.2 The Systems Development Life Cycle 180 Four Stages in the Systems Development Life Cycle 180 Systems Studies and Accounting Information Systems 181 6.3 Systems Planning 182 Planning for Success 182 Investigating Current Systems 183 6.4 Systems Analysis 184 Understanding Organizational Goals 184 Systems Survey Work 185 Data Analysis 186 Evaluating System Feasibility 187 6.5 Detailed Systems Design and Acquisition 189 Designing System Outputs, Processes, and Inputs 189 The System Specifications Report 192 Choosing an Accounting Information System 193 Outsourcing 196 6.6 Implementation, Follow-Up, and Maintenance 197 Implementation Activities 198 Managing Implementation Projects 199 Postimplementation Review 202 System Maintenance 202 CHAPTER 7 Database Design 215 7.1 Introduction 215 7.2 An Overview of Databases 215 What Is a Database? 216 Significance of Databases 216 Storing Data in Databases 218 Additional Database Issues 220 7.3 Steps in Developing a Database Using the Resources, Events, and Agents (REA) Approach 223 Step 1 Identify Business and Economic Events 223 Step 2 Identify Entities 224 Step 3 Identify Relationships 225 Step 4 Create Entity-Relationship Diagrams 227 Step 5 Identify Attributes of Entities 227 Step 6 Convert E-R Diagrams into Database Tables 229 7.4 Normalization 230 First Normal Form 231 Second Normal Form 232 Third Normal Form 233 CHAPTER 8 Organizing and Manipulating the Data in Databases 243 8.1 Introduction 243 8.2 Creating Database Tables in Microsoft Access 244 Database Management Systems 244 An Introduction to Microsoft Access 244 Creating Database Tables 245 Creating Relationships 247 8.3 Entering Data in Database Tables 250 Creating Records 250 Ensuring Valid and Accurate Data Entry 251 Tips for Creating Database Tables and Records 254 8.4 Extracting Data from Databases: Data Manipulation Languages (DMLs) 255 Creating Select Queries 255 Creating Action Queries 258 Guidelines for Creating Queries 260 Structured Query Language (SQL) 260 Sorting, Indexing, and Database Programming 261 Online Analytical Processing (OLAP) and Data Mining 261 8.5 Cloud Databases and Data Warehouses 262 Cloud Databases 262 DataWarehouses 263 CHAPTER 9 Database Forms and Reports 275 9.1 Introduction 275 9.2 Forms 275 Creating Simple Forms 277 Using Forms for Input and Output Tasks 280 Subforms: Showing Data from Multiple Tables 281 Concluding Remarks About Forms 283 9.3 Reports 283 Creating Simple Reports 283 Creating Reports with Calculated Fields 287 Creating Reports with Grouped Data 289 Concluding Remarks About Reports 291 CHAPTER 10 Accounting Information Systems and Business Processes: Part I 301 10.1 Introduction 301 10.2 Business Process Fundamentals 302 Overview of the Financial Accounting Cycle 302 Coding Systems 303 10.3 Collecting and Reporting Accounting Information 304 Designing Reports 305 From Source Documents to Output Reports 306 10.4 The Sales Process 307 Objectives of the Sales Process 308 Inputs to the Sales Process 311 Outputs of the Sales Process 312 10.5 The Purchasing Process 313 Objectives of the Purchasing Process 314 Inputs to the Purchasing Process 315 Outputs of the Purchasing Process 318 10.6 Current Trends in Business Processes 320 Business Process Outsourcing (BPO) 321 Business Process Management Software 322 CHAPTER 11 Accounting Information Systems and Business Processes: Part II 333 11.1 Introduction 333 11.2 The Resource Management Process 334 Human Resource Management 334 Fixed Asset Management 337 11.3 The Production Process 340 Objectives of the Production Process 340 Inputs to the Production Process 344 Outputs of the Production Process 345 11.4 The Financing Process 346 Objectives of the Financing Process 346 Inputs to the Financing Process 348 Outputs of the Financing Process 348 11.5 Business Processes in Special Industries 349 Professional Service Organizations 350 Not-for-Profit Organizations 351 Health Care Organizations 352 11.6 Business Process Reengineering 354 Why Reengineering Sometimes Fails 355 CHAPTER 12 Integrated Accounting and Enterprise Software 363 12.1 Introduction 363 12.2 Integrated Accounting Software 364 Small Business Accounting Software 364 Mid-Range and Large-Scale Accounting Software 367 Specialized Accounting Information Systems 367 12.3 Enterprise-Wide Information Systems 368 Enterprise System Functionality 369 The Architecture of Enterprise Systems 371 Business Processes and ERP Systems 374 Benefits and Risks of Enterprise Systems 375 12.4 Selecting a Software Package 377 When Is a New AIS Needed? 378 Selecting the Right Accounting Software 378 CHAPTER 13 Introduction to Internal Control Systems 391 13.1 Introduction 391 Definition of Internal Control 392 Internal Control Systems 393 13.2 Coso Internal Control Integrated Framework 393 1992 COSO Report 393 2013 COSO Report 395 13.3 Enterprise Risk Management 396 2004 ERM Framework 396 Using the 2004 ERM Framework 398 13.4 Examples of Control Activities 400 Good Audit Trail 400 Sound Personnel Policies and Procedures 401 Separation of Duties 402 Physical Protection of Assets 404 13.5 Monitoring Internal Control Systems 408 Reviews of Operating Performance 408 COSO Guidance on Monitoring 408 Operating Performance vs. Monitoring 408 2012 COBIT, Version 5 409 13.6 Types of Controls 411 Preventive Controls 411 Detective Controls 412 Corrective Controls 412 13.7 Evaluating Controls 412 Requirements of the Sarbanes-Oxley Act 413 Cost-Benefit Analysis 413 A Risk Matrix 415 CHAPTER 14 Computer Controls for Organizations and Accounting Information Systems 425 14.1 Introduction 425 14.2 Enterprise-Level Controls 426 Risk Assessment and Security Policies 427 Designing a Security Policy 427 Integrated Security for the Organization 427 14.3 General Controls for Information Technology 428 Access to Data, Hardware and Software 429 Personnel Policies to Protect Systems and Data 434 Additional Policies to Protect Systems and Data 436 14.4 Application Controls for Transaction Processing 442 Input Controls 443 Processing Controls 446 Output Controls 448 CHAPTER 15 Information Technology Auditing 459 15.1 Introduction 459 15.2 The Audit Function 460 Internal versus External Auditing 460 Information Technology Auditing 461 Evaluating the Effectiveness of Information Systems Controls 464 15.3 The Information Technology Auditor s Toolkit 466 Auditing Software 466 People Skills 468 15.4 Auditing Computerized Accounting Information Systems 469 Testing Computer Programs 469 Validating Computer Programs 471 Review of Systems Software 472 Validating Users and Access Privileges 473 Continuous Auditing 474 15.5 Information Technology Auditing Today 476 Information Technology Governance 476 The Sarbanes-Oxley Act of 2002 476 Auditing Standards No. 5 (AS 5) 478 Third-Party and Information Systems Reliability Assurances 478 Index 487